Entergy CEO says merchant reactors face power price pressure

February 08, 2013|Reuters

By Scott DiSavino

Feb 8 (Reuters) - U.S. power company Entergy Corp's new CEO said Friday that some of its merchant nuclear powerplants are in "challenging economic situations," but the companyhas not made any decisions to shut any of its nuclear plants.

"We have not made any decisions to shut down any of ourmerchant nuclear plants," Entergy CEO Leo Denault said on thecompany's fourth-quarter earnings call.

But, he said, "We are continually assessing our businessesand investments," and noted, "Our plans must be flexible toadapt to high and low price markets and must balance short- andlong-term views."

Entergy is fighting New York and Vermont to keep the giantIndian Point nuclear plant in New York near New York City, andthe Vermont Yankee reactor in Vermont, operating for another 20years or so.

At least one energy analyst that follows the nuclearindustry, however, has put Entergy's Vermont Yankee andFitzPatrick reactor in New York on a list of possible nuclearplants to shut due to weak gas and power prices, among otherthings.

Two other generators have already decided to shut nuclearplants in 2013 - Dominion Resources Inc will shut itsKewaunee reactor in Wisconsin later this year and Duke EnergyCorp this week retired its damaged Crystal River Reactorin Florida.

Natural gas prices in 2012 hit a 13-year low and are stillweak. Gas-fired power plants set the price for electricity inmuch of the country.

Those weak gas prices, caused by record shale production,have pushed power prices to near decade lows, hurting profitmargins for generators - especially merchant generators incompetitive, deregulated states like in the Northeast and NewYork where prices are set by the market.

"Near-term power prices are challenging for some merchantnuclear generating units in certain competitive markets,"Denault said, noting the company was "bullish longer-termrelative to the current forward curve."

He said some plants are in the more challenging economicsituations for a variety of reasons, including "the market forboth energy and capacity, their size, their contractingpositions and the investment required to maintain the safety andintegrity of the plants."

He would not name the plants but said, "There are years whencertain plants' cash flows can be negative at today's forwardprice curve."

Denault said Entergy would continue to advocate for marketsthat value what nuclear plants offer, including "a source ofclean energy with effectively zero air emissions, gridreliability supported by low forced outage rates and fueldiversity and jobs and other contributions to the regionaleconomy."